mercoledì 6 maggio 2009

“Quasi-criminal behaviour of some financial institution”

Paper per la 2° Conferenza internazionale sulla criminalità

Ginevra, 29-30 giugno 2005

[dall'archivio storico]


Quasi-criminal behaviour of some financial institution”

By Marco Saba

ONG Centro Studi Monetari*


Summary

In recent times, through the internet, there are a large number of documents about economy, finance, and banking practice. An example is the website of the Austrian School of Economics, www.mises.org, where it is possible to read online a vast literature: most interesting are the works of Murray N. Rothbard, one of the leading representatives of this interesting school of thought [1]. The discovery of some exotic banking practices led the author to do an investigation into the field of money and credit. The results presented here may be well know to the specialist, but the average person will be surprised with our findings.

Who is the owner?

One of the first discoveries was that there is not currently a law stating who is the owner of the money at the time of the issuing process. This point was firstly remarked on by the Italian University retired professor Giacinto Auriti [2]. He was so surprised that he sued the Italian Central Bank. The lawsuit was lost but the governor was removed - at the time it was the actual President of the Italian Republic: Mr. Carlo A. Ciampi. The grounds of the lawsuit were: “If the Central Bank is not the owner at the time of issuing the money, how could she lend that money through the practice of buying Italian Treasury bonds ?” Very recently, under indication of the writer, a well know consumers association – ADUSBEF [3] - reiterated the lawsuit but this time claiming back - from the Banca d’Italia and the European Central Bank - the ‘seigniorage’ in the name of one of ADUSBEF’s members. The seigniorage is the difference between the costs of printing the money and it’s face value. In the case of the 500 euros bill, it can be very significant. In old times, the seigniorage was a privilege due to the sovereign, the king, but now, after the referendum held in 1946, in Italy it is the people who are the sovereign. The king was discarded.

Accountability?

The Italian central bank – Banca d’Italia – is a private corporation, in a manner very similar to the Federal Reserve, the US central bank. The owners are other banks, insurance companies but, for at least 5%, the partnership is ‘secret’. One of the points is that the Italian central bank is the arbiter regarding other banks conduct, but it is accountable to nobody. I.e.: no public auditing. The fact that the central bank is the controller of other banks that are the same owners of the central bank represent a very éclatant case of conflict of interests that, in our opinion, is very worse than the much more publicized alleged conflict of interests regarding the Italian Prime Minister – Mr. Berlusconi. But this is not the point, because this paper doesn’t want to deal in political matters.

Where goes the seigniorage?

The seigniorage – from the point of view of the Italian central bank – is the difference from the total nominal value of the banknotes and the treasury-bonds that she received - plus the interest. In the balance sheet, they put the sum of the FACE value of the money printed in the Liabilities chapter. In our opinion, they have to write in the Liabilities the COST of printing the banknotes instead of the FACE value [4]. And, obviously, they have to put the face value of the bonds in the profit side of the balance. In the ‘normal’ accounting, the seigniorage disappear with a touch of mystery. To better understand how this practice may be illegal, imagine an owner of a Casinò who put the FACE value of his fiches in the Liabilities side of the balance, instead of the simple cost from buying the fiches. It is the opinion of the writer that the seigniorage goes to the benefit of the owners of the Italian central bank, creating the big black hole of the so called ‘public debt’. It is obvious that if the Treasury Ministry pays for the banknotes only the costs of printing, the public debt would be minimum if not zero. But we have to tell this to the élite behind the unelected owners of the central bank.

The counterfeiting issue

If the euro created by the ECB is not “the money of the European people”, but the money owned by an oligopoly [5] – it becomes evident that this money is a counterfeit one. This was somehow pointed out by the French Nobel prize Maurice Allais. Yes, in the Alice-in-wonderland world of economy, also the Nobel prize in Economics is fake: it isn’t the ‘Nobel prize’ from the Nobel Foundation, it is a prize created by – guess who? – the Swedish central bank!

A triangle – or more

We must remember that, prior of paying the interests on the ‘public debt’, the Italian State in recent years had normally some 5-10% in profits. The actors of this tragedy are: the Italian Treasury Ministry, the central bank and the citizens. As a normal practice, it is the citizens that pay for the ‘malinvestment’ of the Treasury Ministry. In Italy it is historically normal that the profits are privatized while the burden of the costs is left to the public. When the scam is revealed, the people working at the Ministry risks a charge for peculate [6], which is punished by the Italian Penal Code. We can also expect a somehow fierce reaction from the public, because the total seigniorage per capita amount to some 1,3 million euros. So the people are taxed three times:

First, by normal taxes like VAT and the income annual tax;

Second, by the seigniorage scam;

and, Third, with the inflation due to the unstoppable work of the ECB’s – or their partners’ – printing machines.

This whole process was somehow less detectable under the old ‘gold-exchange standard’, because the central bank could say that she had a ‘reserve’ to fulfil the redemption of the banknotes.

Fractional reserve’s seigniorage

While at this point it is very easy to calculate the seigniorage held by the central bank – grosso modo you take the ‘public debt’ and divide it for the number of citizen, and you arrive to some 25,000 euros – a little bit more complicated is to calculate the seigniorage deriving from the creation of credit by the normal banks. You must take into consideration the fractional reserve banking – a Ponzi’s scheme: i.e. the power to create money out of the thin air. The fractional reserve actually is at 2%, so the banks need to have deposited 100 euros in CASH to issue 5,000 euros of ‘electronic money’ ! While creating virtual money, sight deposits, they appropriate themselves of the relative seigniorage because, contrary to the normal wisdom, they never destroy the money that they create – technically we call this the ‘banking reflux’ [7]. This is also the plain explanation of why we have an ever expanding amount of money. So imagine that the 25,000 euros created with the public debt are deposited in any bank: the banking system – in the whole – can create 1,250,000 electronic euros more. You sum up that with the previous 25,000 and you end up with a credit of 1,275,000 euros for every Italian citizen, children included. In the U.S.A. the sum due by the Federal Reserve is less, circa 1,000,000 US Dollars. Anyway, such a sum of money if distributed – not created anew – would make any people enough rich to get out from the micro-criminality, and this is why I am here speaking about this issue.

Some of the ‘seigniorage-tax’ goes to the North of Europe

This is fascinating because in the author’s opinion it can explain somehow the motivations behind the murder of Anna Lindh, the Swedish Foreign Minister who advocated the introduction of the euro in Sweden. When the ECB distribute the seigniorage, she gives it to the central banks that are shareholders of the ECB: As an example, the Italian central bank get the 14.7% of the declared euro seigniorage (they refer to the seigniorage sometimes as ‘monetary rent’ – I like more the Italian definition: “pizzo”). But in the countries where the euro has not substituted for the national currency, as in Britain, Sweden and Denmark, the local central bank get TWO seigniorages: the full 100% seigniorage on the local currency PLUS the share of the euro seigniorage. Do you think that this can be a valid issue to justify a murder?

(Yes, in the case that the assassin was not a lone-nut like oh-so-many in our post World War Two history).

What to do and how ?

The author suggest to make very soon a general monetary reform [8] where the seigniorage destination will be crystal clear – and accountable to the public. Without monetary sovereignty it is very difficult to imagine a true democracy. If the scope of the central bankers is to globalize this dubious system, we can foretell a fierce opposition by the acknowledged people – should they live in Iraq or elsewhere. Furthermore, an uncontrolled revelation of the truth, the explosion of the ‘fake-public-debt bubble’, can bring us to some sort of a third millennium revolution. After all, in the U.S.A. it was to free themselves from the pound sterling system that they had the Independence War.

Where are we now, exactly?

Following the lucid theory of the Austrian School of Economics about the trade-cycle, we are at the ’crack-up boom’ phase. This is emerging in the USA real estate market with the rapid uprising of the house price.

The crack-up boom is the final short-lived boom that occurs in the last stages of a period of seemingly endless inflation. The crack-up boom results from a "flight into goods or real values" and marks the end of the inflation by a complete breakdown of the monetary system.

The fact that it is the dollar instead of the euro that was exposed to recent critics [9] is not very funny, because in the actual international monetary system all the official fiat currencies are intertwined. If the dollar falls, the entire system will suffer a bust and crash.

So as you see, the problem it is not only about simply exposing that some kind of malfunction affects the occidental banking system, and if those malfunctions are criminal or not [10], it is about survival.


Notes:


* Due to the origin of the author, this paper has an Italian 'bias': i.e. it represent the situation from an Italian perspective and point of view.

The CSM website is at: http://www.studimonetari.org

[1] See: Murray N. Rothbard, The Mystery of Banking, Richardson & Snyder, 1983

http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf

[2] See: Giacinto Auriti, L'Ordinamento Internazionale del Sistema Monetario, Edigrafital, Teramo, 1996

http://www.studimonetari.org/ordinamento.html

[3] Associazione Difesa Utenti Servizi Bancari E Finanziari

http://www.adusbef.it

[4] See: Bruno Tarquini, La banca, la moneta e l'usura, ed. Controcorrente, 2001

[5] An Italian lawyer described the situation created by the monopolies of money and credit as a “conventio ad excludendum”, i.e. a situation in which some people reserve to themselves a power while actively excluding all the rest of the people from that power. Strangely enough, those de facto monopolies are not an issue pursued by so-called anti-trust institutions.

[6] See:PROFILI DEL REATO DI PECULATO - di Cristiano Brunelli

http://www.arsg.it/Articoli/PROFILI_DEL_REATO_DI_PECULATO.doc

[was: http://www.diritto.it/articoli/penale/brunelli6.html]

[7] See: Pierre Parisien, Il riflusso bancario per i non-iniziati, Congresso dell'Associazione canadese dell'economia – 2002

http://saba.fateback.com/articoli/riflussobancario.html

[8] There are many ideas in the internet, one of the texts most relevant for our scope, is: James Robertson, John Bunzl, Monetary Reform - Making it Happen, International Simultaneous Policy Organisation - ISPO, 2004

http://www.jamesrobertson.com/book/monetaryreform.pdf

[9] See: Financial Times, World Bank warns on dollar 'risk' for poor
By Andrew Balls in Washington, Published: April 6 2005

http://news.ft.com/cms/s/d7a003c4-a6a2-11d9-a6df-00000e2511c8.html

[10] See: Nuri, V. Z., A Fractional Reserve Banking as Economic Parasitism: A Scientific, Mathematical, & Historical Exposé, Critique, and Manifesto, 2002

http://netec.mcc.ac.uk/adnetec-cgi-bin/get_doc.pl?urn=RePEc:wpa:wuwpma:0203005&url=http://econwpa.wustl.edu:8089/eps/mac/papers/0203/0203005.pdf



1 commento:

  1. Nota Bene: il discorso di cui sopra non venne mai effettivamente pronunciato poiché - dopo averlo mandato in anticipo al presidente dell'Osservatorio sulla Criminalità Organizzata - mi venne comunicato che... era meglio soprassedere a denunciare crimini bancari in Svizzera... Bisogna dire che forse - ex post - sarebbe stato meglio che la cosa venisse denunciata in pubblico allora. Ma la realtà ormai sta venendo fuori e la cosa più sconsolante è che le autorità - le nostre élite - continuano a nascondersi dietro ad un dito senza affrontare la questione di petto. Ci penserà la cittadinanza?

    RispondiElimina

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